Amana Bank PLC saw its December quarter performance languishing in the three months to December 31, 2021 (4Q21) due to the pressure coming from the rising funding cost but the bank defended its margin amid the robust growth in advances during the year.
The bank, which operates under Islamic banking principles, reported net financing income of Rs1.08 billion in the December quarter, down 4 percent from the same period in 2020 as increase in financing expenses outstripped the increase in the financing income towards the latter part of the year.
This in fact reflects the rupee liquidity crunchthat grew intensely during the fourth quarter, which pushed up the cost of funds in the banking sector.
The bank’s financing expenses rose by a steeper 21 percent to Rs.985.6 million in the final quarter while the financing income rose by 6 percent to Rs.2.07 billion.
However, the bank managed to slightly increase its financing margin to 3.8 percent from 3.7 percent at the beginning of the year.
The bank gave Rs.13.93 billion in new advances, recording a 21.7 percent growth for the year and in the December quarter the bank gave Rs.2.93 billion in advances.
This is one of the highest growths in advances in the industry for 2021.
Despite the robust growth, the bank managed to reduce its gross non-performing loans ratio to 3.1 percent from 4.0 percent at the beginning of the year.
Meanwhile, the bank set aside Rs.370.9 million for possible losses in advances and other financial assets in the quarter, up 67 percent from the same period in 2020.
For the full year the bank provided Rs.784.9 million, up 53 percent from 2020.
The bank reported earnings of 15 cents a share or Rs.391.5 million for the October- December 2021 quarter compared to earnings of 8 cents a share or Rs.213.3 million in the corresponding quarter in 2020.
The bottom-line received a boost from a tax reversal of Rs.46.7 million as the before-tax profits declined by 7 percent.
Meanwhile, for the year ended in December 31, 2021, the bank reported earnings of 31 cents or Rs.824.7 million compared to earnings of 17 cents a share or Rs.463.7 million.
Jeddah based IsDB Group being the principal shareholder owns 29.97 percent shareholding of the bank.
